Blur has quickly emerged as the dominant player in the NFT lending arena, capturing a staggering 82% of the lending volume since its launch in April 2023. The controversial nonfungible token exchange’s foray into lending services has sparked curiosity about the factors fueling its success. What sets Blur’s NFT lending program apart from the competition?
The company made a groundbreaking announcement in April. During that announcement, Blur confirmed that it would venture into offering collateralized loans for blue-chip NFT holders. Moreover, buyers could also acquire NFTs by paying a down payment upfront and then financing the rest of their purchase. Their program is known as Blend, and since it was introduced, has proved to be massively popular.
Over the course of the last 22 days, Blur has achieved an impressive feat by facilitating $308 million in loan volume. This substantial amount comprises a remarkable 82% share of the overall lending volume, which amounted to $375 million in May. Such astounding success has propelled Blend to new heights, as the volume now represents a significant 46.2% of the exchange’s operations.
Notably, Blend users are mainly targeting the Azuki collection. Renowned for its excellent art and wealthy collectors, Azuki offers a relatively stable floor for loan operators to successfully work with. Up to today, Azuki has seen $127M in loan volume. This platform also supports loans for the other top NFT collections including DeGods, CryptoPunks, Mutant Ape Yacht Club, Milady Makers, and Bored Ape Yacht Club.
For now, the high net-worth collectors have dominated lending volumes. That is not surprising since Blur is rewarding Blend users with their latest airdrop. In that context, whales are farming the airdrop by investing lots of money into the Blend platform. The more loans they provide and take out, the more lending points they get and the larger airdrop these users will eventually get.
Has Blend Affected The NFT Market?
Similar to Blur’s previous airdrop campaigns, Blend has caused a ripple effect on the entire NFT market. At first, the prices spiked upwards as Blend unlocked significant liquidity that was locked previously in nonfungible tokens.
A number of holders took the opportunity to utilize their valuable items and cryptocurrencies as collateral, enabling them to acquire additional NFTs. Their aim was to engage in profitable trades while hoping to settle their borrowing costs, which occasionally reached exorbitant levels. Moreover, certain buyers capitalized on Blend’s attractive low money-down financing options, allowing them to obtain NFTs at a fraction of their original costs.
Despite its massive success, some of the NFT community members have been critical of Blend. The co-founder of alternative NFT lending protocol NFTFi, Jonathan Gable, said:
“Unchanged, the current incentive design will likely lead to bad outcomes for borrowers such as mass defaults or liquidations of high-risk loans, flush NFTs into the hands of point farmers, and in consequence, may lead to much higher market volatility. Existing peer-to-peer protocols tend to be more borrower-friendly and lead to healthier loan markets.”
Irrespective of all the controversies, Blur seems to have continued to stamp its authority as a disruptive player in the NFT market. The crypto exchange’s Blend program is another notable example of its readiness and willingness to innovate to meet all customer demands.
Furthermore, it also proves that Blur understands what its customer base wants – provide NFT buyers with a means to purchase more NFTs and they will readily jump at the new opportunity.
